The Demand Equation for a Certain Brand of Fax Machine

question 202

Multiple Choice

The demand equation for a certain brand of fax machine is 4x + p - 1,550 = 0, where x is the quantity demanded per week and p is the unit price in dollars. The supply equation is 3x - 4p + 2,400 = 0, where x is the quantity the supplier will make available in the market when the unit price is p dollars. Find the equilibrium quantity and the equilibrium price for the fax machines.

• A) equilibrium quantity 200 units; equilibrium price $750
• B) equilibrium quantity 200 units; equilibrium price $850
• C) equilibrium quantity 90 units; equilibrium price $850
• D) equilibrium quantity 90 units; equilibrium price $750

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Definitions:

Equivalent Units

A concept used in cost accounting to convert units of production into an amount of completed units to measure progress.

Conversion Costs

Costs specifically associated with converting raw materials into finished goods, which include labor and overhead.

Whole Units

The number of units in production during a period, whether completed or not.

FIFO Method

An inventory valuation method that assumes the first items placed in inventory are the first sold, standing for "First-In, First-Out."